Shares of SK Hynix and Samsung Electronics continued their steep decline on Wednesday, as record quarterly earnings from the memory-chip giants failed to satisfy investor expectations that had been inflated by the artificial-intelligence boom.
SK Hynix reversed an early gain and tumbled more than 8% during trading on July 29, while Samsung slid nearly 5%. The losses followed a brutal session on Tuesday, when SK Hynix plunged 14.7%, Samsung dropped 14.4%, and the broader KOSPI index sank 10.84%.
The selloff underscores a growing disconnect between strong operational performance and market sentiment. SK Hynix reported record second-quarter revenue of 79.32 trillion won and operating profit of 60.54 trillion won, but both figures came in roughly 5% to 7% below consensus estimates. The company's operating profit surged 557% year-over-year, driven by booming demand for high-bandwidth memory (HBM), while revenue rose 257%. SK Hynix also noted that mass shipments of HBM4 began during the quarter.
Despite these numbers, investors focused on the miss relative to lofty expectations. After a sharp rally earlier this year, the market had priced in near-perfect execution. SK Hynix's heavy concentration in HBM also limited its exposure to some of the strongest price gains in conventional memory, adding to concerns that its product mix did not deliver the upside traders had anticipated.
Mirae Asset Securities analyst Kim Young-gun described the recent share-price correction as "excessive relative to its fundamentals." Mirae retained a Buy rating but slashed its target price to 2.8 million won from 4.2 million won, citing lower sector valuations, potential NAND weakness, and heightened volatility.
Samsung's preliminary guidance shows sales of about 171 trillion won and operating profit of 89.4 trillion won. Its detailed second-quarter results, due on July 30, will be closely watched for signs of strength in conventional DRAM, HBM, and other divisions that could reassure investors. The broader selloff has also been fueled by concerns over Chinese competition and whether AI infrastructure spending can sustain its rapid pace. For more context on the recent chip rout, see our coverage of the initial plunge earlier this week.
Looking ahead, the immediate direction for both stocks hinges on hyperscaler spending guidance, evidence on HBM and conventional-memory pricing, and whether leveraged selling and margin calls continue in Korea. The bearish case is that valuation compression can persist even while earnings remain powerful. SK Hynix and Samsung had enjoyed enormous gains, leaving both vulnerable when results merely met operational goals rather than exceeding investor assumptions.
The bullish case rests on supply tightness and longer-term contracts. SK Hynix said it has finalized multi-year agreements with around 10 major customers, offering some visibility into structural AI-memory demand. SK Securities analyst Han Dong-hee argued that "a correction is an opportunity," noting that AI's memory bottleneck and chipmakers' earnings strength are unlikely to disappear quickly. However, further losses remain possible while sentiment and positioning stay fragile. For a broader view of the sector's challenges, see our analysis of the Nasdaq slide amid chip stock weakness.
No level can identify the precise bottom. The crash reflects a recalibration of expectations after an extended rally, and the path forward will depend on whether AI-driven demand can continue to outpace supply constraints. As the market digests these dynamics, investors should monitor upcoming earnings reports and pricing trends for further clues. For additional perspective on the competitive landscape, read about how Chinese chip rival CXMT's debut is stoking fears.
This article is for informational purposes only and does not constitute financial advice.
